* MSCI world equity index slips 0.2% to nine-day low
* European shares erase losses on ECB inflation revamp
report
* U.S.-China trade war takes toll on earnings
* Bond yields fall as investors seek safety
* Graphic: U.S. versus European earnings https://tmsnrt.rs/2k0q0j0
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates prices throughout; adds Euro STOXX 600 erasing losses)
By Tom Wilson
LONDON, July 18 (Reuters) - Global shares slipped on
Thursday on growing signs that a trade dispute between the
United States and China was taking a toll on corporate earnings,
with nerves spreading from Wall Street through Asia to European
markets.
MSCI world equity index .MIWD00000PUS , which tracks shares
in 47 countries, fell 0.2% to its lowest in nine days, after the
start of the earnings season brought bad signs. Rail freight
giant CSX Corp CSX.O , cut its revenue forecast as it warned of
the impact of the U.S.-China trade war, pushing down Wall Street
indexes on Wednesday. In Europe, too, earnings were top of the agenda. Tech stocks
led the slide as software firm SAP SAPG.DE , Europe's most
valuable tech stock by market cap, slumped 10% on poor results,
flagging the impact of the U.S.-China trade war. The Euro STOXX 600 .STOXX fell 0.5% to its lowest in
almost three weeks, later erasing its losses as traders cited a
Bloomberg News report that the European Central Bank staff are
studying a potential revamp of the bank's near 2% inflation
goal. That could mean longer stimulus than previously thought.
With nerves already on edge over when face-to-face talks
between the United States and China will resume, U.S. President
Donald Trump on Tuesday maintained pressure on Beijing with a
threat to put tariffs on another $325 billion of Chinese goods.
Investors also cited a report that progress toward a
U.S.-China trade deal has stalled as the Trump administration
works out how to address Beijing's demands that it ease
restrictions on Huawei Technologies. Wall Street futures gauges were slightly down.
"It's still about the U.S. and China dispute," Christophe
Barraud, chief economist and strategist at Market Securities.
"The trade war is creating uncertainty, weighed on capex, and
clearly on trade flows."
"There are also problems with guidance, especially in the
transportation sector. The fact is that one of the key stories
of this year is global trade flows contraction," he said.
Adding to the concerns over corporate health, Netflix shed
U.S. subscribers for the first time in 8 years, sending shares
falling over 10% after the close of the market.
Compounding the trade concerns were worrying signs for the
economy emerging from Japan to the United States.
Japan's exports slumped yet again, falling 6.7% in June,
while manufacturers' confidence fell to a three-year low in July
on the back of the trade tensions and slowing China growth.
U.S. housebuilding fell in June for a second consecutive
month, with building permits also falling, in a possible sign of
more trouble ahead for the housing market.
The earnings anxiety and macro data boosted demand for safe
haven assets, with yields on benchmark 10-year and 30-year U.S.
Treasuries climbing overnight.
BOND YIELDS FALL
Euro zone government bond yields fell following the report
on the ECB, which also pushed the single currency down 0.1% to
the day's lows of $1.1205 EUR= .
Euro zone bonds had already faced a negative mood after the
poor economic data and corporate earnings had deepened worries
over the global economy, boosting bets on interest rate cuts by
major central banks.
Some investors are already betting on whether the U.S.
Federal Reserve will be cut by 25 basis points or 50 basis
points in July.
While markets take comfort from central banks' willingness
to support growth, said Sunil Krishnan, head of multi-asset
funds at Aviva Investors, there were concerns for equity markets
that have rallied on the back of stimulus expectations.
The weak start to the Q2 earnings season may spill over into
the outlook for the remainder of the year, threatening equity
markets' stellar rally this year.
"We are probably in the middle of analysts downgrading Q3
company earnings expectations," he said.
Earlier in the day, MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS lost 0.3%, with Tokyo's
benchmark Nikkei .N225 tumbling 2%, its biggest one-day fall
in four months.
POUND TO PARITY?
In currencies, the dollar slipped for a second day against
its rivals on the back of softer U.S. Treasury yields, with
investors focusing their attention on the Fed's meeting next
week.
Against a basket of its rivals .DXY , the dollar edged 0.1%
lower to 97.195.
Sterling GBP=D4 was a shade higher at $1.275, off its
lowest since April 2017 touched on Wednesday amid growing risks
of Britain leaving the European Union in a no-deal Brexit.
Major British banks, such as HSBC, are already talking of
the possibility of the pound breaching post-Brexit referendum
lows of $1.149, with some asking whether the pound is headed for
parity against both the dollar and the euro. On the commodities front, oil rose 1% after Iran said it had
seized a foreign oil tanker in the Gulf.
Brent crude LCOc1 futures were up 58 cents at $64.24 a
barrel by 1100 GMT. They fell 1.1% on Wednesday.
For Reuters Live Markets blog on European and UK stock
markets, please click on: LIVE/
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